Knowing me, knowing you: your quick guide to understanding business credit scores

Posted on by Tas

Estimated read time: 3 mins

It should come as no surprise that, according to a recent Experian survey1, over two thirds of business owners see increased sales and profitability as their top priorities for the next 12 months.

However, what many have not considered, is the impact their business credit score can have on the future sustainability of their business. Almost a fifth of respondents to the survey admitted they have an insufficient understanding of business credit scores and over a quarter said they didn’t know or were unsure of their business’ credit score.

If these results sound familiar, then we’ve put together a quick guide explaining how business credit scores work, including their impact on cash flow and growth.

What is a business credit score?

A business credit score is a value generated by a credit reference agency like Experian. It’s this value that creditors and banks can use to decide whether to supply your business with credit, and at what rate of interest.

Although each credit reference agency will calculate a credit score slightly differently, most will take into account a whole range of different factors, including your company’s payment history and information from creditors.

How can your business credit score help improve your business?

Having a good business credit score not only helps you secure credit, it can also give you a competitive edge when tendering for new business or negotiating new contracts. But how do you ensure your business credit score is the best it can be?

Regular checks on your business’ credit score are a good place to start, and you can do this by using tools like Experian’s My Business Profile. This allows you to see exactly what creditors see before deciding whether to offer you credit, it helps ensure you don’t get stung with any nasty surprises and take steps to improve your business’ score if needed.

Keeping an eye on your customers’ credit scores.

It’s a well-known fact that late payments from your customers and unpaid invoices can have lasting effects on your business. If left to build up, the damage to cash flow is almost inevitable, making it difficult to pay creditors and suppliers. This ability to pay, of course, is taken into account when calculating your business credit score.

However, with tools like Experian’s Business Credit Reports you can instantly check new and existing customer’s credit scores online, so you can make an informed decision about whether to work with or carry on working with them.

To help you make safer decisions about who you do business with, find out more about Experian’s Business Credit Reports. Alternatively, be smarter about how others see your business by using Experian’s My Business Profile.


1  Experian survey was conducted between December 2017 and January 2018. In total, 115 small and medium sized businesses took part in the survey.

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